Crypto Was Always Smoke and Mirrors
The world of cryptocurrency is rich with eccentric characters and anonymous Twitter personalities. So perhaps it shouldn’t be a surprise that one of the early figures who called attention to the problems with Sam Bankman-Fried’s cryptocurrency exchange, FTX, is a 30-year-old Michigan psychiatrist who investigates financial crimes as a hobby.
James Block, who runs a crypto newsletter called Dirty Bubble Media, has gotten overlooked in the swift and spectacular collapse of FTX. On November 2, a report from the crypto publication Coindesk highlighted the troubled balance sheet of Bankman-Fried’s crypto-trading firm, Alameda Research. Two days later, Block’s post titled “Is Alameda Research Insolvent?” went viral, and for good reason: Block had connected the dots from Coindesk’s earlier work to suggest that both FTX and Alameda had their money tied up in their own made-up tokens—an unsustainable circular flow of cash that would eventually sink FTX. Within a week, the company filed for bankruptcy.
Currently, Bankman-Fried is under investigation from federal prosecutors who are looking into whether he engaged in illegal market-manipulation tactics. He’s also supposedly going to testify before the House Financial Services committee in the coming weeks. Ignoring the advice of his lawyers, Bankman-Fried has given a series of interviews with independent journalists as well as national at a conference late last month.
